Fiscal cliff fall would have broad impact in San Diego

| 2 p.m.Dec. 29, 2012

Dozens of people joined together Friday afternoon at the intersection of Winchester and Margarita roads in Temecula for a rally to advocate for a compromise in the 'fiscal cliff' negotiations.
— Don Boomer

Dozens of people joined together Friday afternoon at the intersection of Winchester and Margarita roads in Temecula for a rally to advocate for a compromise in the 'fiscal cliff' negotiations.
— Don Boomer

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San Diego  The possibility of higher taxes, layoffs and broad federal spending cuts hitting San Diego County — from the defense sector to low-income residents and everyone in between — remains.

President Barack Obama and congressional leaders this weekend were seeking a way to pull the nation back from the brink, if only with a temporary measure.

Failure by Congress and the White House to avert the so-called “fiscal cliff” by Tuesday would trigger automatic tax increases — perhaps the most immediate impact — and cuts ranging from 2 percent to 10 percent in most federal agencies and programs.

Going over the cliff would reduce Pentagon spending $492 billion over a decade, with a $55 billion annual across-the-board cut beginning in January.

Economists and the Congressional Budget Office say the combined effect could throw the nation’s fragile economy back into full-fledged recession and send the unemployment rate back up.

It all would make for anything but a Happy New Year for county residents, including the 46,400 civilian federal government employees, nearly half of whom work for the Defense Department. For many, the uncertainty over the negotiations in Washington as the clock ticks down to the Jan. 1 deadline can be maddening.

“It’s crazy,” said Shawn Moran of Solana Beach, who is vice president of the National Border Patrol Council, which represents 17,000 agents and support staffers nationwide, including 2,200 in San Diego. “We’ve been hearing a lot about possible furloughs and reduction in force. A lot of our junior people are nervous.”

San Diego’s education and medical research and biotech sectors are also bracing for a drop in federal support.

What there won’t be is a government shutdown, such as that experienced in 1995 and 1996 when then-President Bill Clinton and Congress warred over the budget.

All federal operations are expected to continue throughout next week and for the foreseeable future. The department cuts are scheduled for gradual phase-in with no immediate clarity on where or when they will be made.

Federal agencies were informing their workers last week that day-to-day operations would see no change after New Year’s, the day the $1.2 trillion in cuts over the next decade are to begin under the provisions of the deal struck earlier this year to raise the nation’s debt ceiling.

San Diego’s defense industry would feel the pinch. The sector responsible for 169,000 jobs could see as many as 30,000 people handed a pink slip under the worst-case scenario, according to a recent analysis by the San Diego Regional Economic Development Corporation, the Regional Chamber of Commerce and the Military Advisory Council.

Pentagon cuts also could see a drop in the more than more than 100,000 U.S. Navy and Marine Corps personnel assigned to the region. The loss of spending by the reduced numbers of troops and the good to support them compound the impact on the local economy. The Pentagon, as with all federal agencies, has yet to specify precisely where its cuts will occur.

On the social service front, groups that provide food and medical assistance are bracing for the worst.

“What we’re most concerned about is unemployment extension benefits stopping. That mean’s we’ll immediately see more people in our food lines,” said Chris Carter, vice president of the Jacobs & Cushman San Diego Food Bank, which provides 350,000 meals countywide each month.

An estimated 400,000 Californians are among those losing unemployment benefits. The number of San Diegans in that group was not immediately clear.

At the height of the Great Recession in 2009, the food bank was handing out grocery bags with 10 to 12 items. Continuing demand has forced Carter’s agency to scale that back to about six items per bag.

“We’re very concerned about a potential cut to food stamps because we view those as part of a positive step for people who are unemployed to get back on their feet,” he said.

In North County, the Vista Community Clinic stands to lose about $100,000 from the roughly $5 million in federal aid it gets each year to help pay for medical services for about 60,000 people.

“It’s definitely going to impact us,” said Michele Lambert, the clinic’s chief financial officer. “We do have a contingency plan and would probably have to trim staff.”

Like most Americans, Lambert was hoping for a last-minute deal.

“We hope they’ll resolve it and keep our funding intact. If not, there’s going to be a far-reaching effect on our health center and on the economy in general.”